Living On A Budget
The key to living without credit cards includes two key steps. First, keep savings built up for emergency expenses. Second, stop living beyond your means. Budgeting is the only way you can survive this economy. Be realistic. Does a four-person family truly need five bedrooms and three baths? Do you need a seven-person van? Learning to scale back on your expenses saves money, it also gives your children a realistic goal for the future.
According to a consumer credit counseling service, a typical monthly budget should look like this:
- Five percent to miscellaneous
- Five percent to utilities
- Five percent towards medical costs
- Seventeen percent to unsecured debt
- Seventeen percent to your groceries
- Ten percent to savings
- Thirteen percent to transportation
- Three percent to clothing
- Twenty-five percent to rent/mortgage
Video: How to Create a Budget
A Solid Savings’ Plan
It is important to sit down and compare expenses and income when budgeting. Find out where you are doing well and where you need improvement. For the majority of financially strapped people, debt is usually to blame. Take money from other areas and use that money to pay off debt as quickly as possible.
Automated deposits are a must-have. Ask your employer for the proper paperwork. You’ll make fewer trips to your bank saving time and gasoline costs.
Create different accounts and make sure that money is used for nothing else. Set-up a mortgage account and set up automated payments using that account. Do the same with car loans and other expenses. Realistically, you should have an account for:
- Car loans/expenses
- Checking for groceries and bills
- Mortgage/rent and homeowner’s insurance
- Savings (emergency, home repair and retirement)
- Taxes
- Unsecured debt (credit cards, college debt, medical bills)
It’s advisable to create an emergency savings fund that is not easy to access. Linking that account to a checkbook or ATM card makes it more likely you’ll tap into that account unwisely. Make sure you are making regular deposits to that account. You should try to deposit ten percent of your paycheck into that account.
Remember that emergency savings cover many things, so it’s best to separate them. Set up an IRA for your retirement. Have an emergency account for household repairs like appliances, plumbing and electrical. Also, have a savings account for unexpected emergencies like property damage.
Ways To Save
For many, setting up a monthly budget is a clear wake-up call. You’ll quickly find that your monthly paycheck doesn’t stretch as far as you would hope. It is at this point, that you’ll need to cut back on your expenses.
We live in a society where bigger has always meant better, unfortunately, bigger also means more expensive. Trade in your large, gas-guzzling vehicle in for a smaller, more efficient model. Sell your home and purchase or rent something smaller. Not only will maintenance be more affordable, but also smaller homes are less expensive to heat.
Groceries are a great place to save money. It’s worthwhile to pay for a Sunday paper. Often the coupons you will use help pay for the paper itself. Save coupons and carry them with you. Try to shop at stores offering double or triple coupon deals.
Video: Personal Finance Management - How to Save Money
Purchase generic brands whenever possible. The amount you save quickly adds up. Add your savings to your emergency funds. Purchase your clothing off-season. Sure you may not be dressed in the latest fashions, but you will find incredible deals when stores clearance their seasonal clothing. Thrift stores and closeout stores help you save hundreds per year. You can purchase clothing, groceries and appliances at a fraction of the cost. Join groups like Freecycle where you can swap your unwanted goods for items you need. It’s a great way to get free books, clothing, kitchen necessities and more!
If you’re a person whom enjoys going out to eat, or going to the movies look for less expensive options. Many cities hold free concerts in the park and churches and other organizations are known for inexpensive charity dinners. You can enjoy a meal out while helping fund a worthy cause. Budgeting can be extremely hard work. In the end, you’ll be out of debt and feeling great about your future!
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